CDPQ’s performance after six months | Better than indices, but behind its peers

Despite a negative return of 7.9% for the first half of the year, which resulted in a loss – on paper – of 33.6 billion, the Caisse de dépôt et placement du Québec (CDPQ) did better than its benchmark index and the major stock market indices. However, other pension plan asset managers have fared better. Does this mean that the woolen socks of Quebecers are underperforming compared to their peers? The answer is more complicated than the half-yearly aggregate return alone shows.

Julien Arsenault
The Press

While the Fund was seeing red from 1^er January to June 30 of this year, which the institution called “the worst half of the last 50 years for the stock and bond markets”, the Ontario Teachers’ Pension Plan (Teachers) was able to release a yield of 1.2%.

Also in Ontario, Omers, responsible for the pension assets of municipal employees in the province, remained close to breakeven with a performance of -0.4%.

Is the Quebec manager of public pension and insurance plans lagging behind? Robert Pouliot, consultant in fiduciary risk cases and lecturer at UQAM, considers the game of comparisons risky.

“It’s difficult to make a judgment over six months in a market where the markets were in full transition,” he says. There was a rise in interest rates and the prospect of a recession. »

A sign of volatility after six months, the average return for Canadian pension funds was -14.7% in the first half, according to the RBC Investor & Treasury Services Pension Plan Universe. Nevertheless, even over five years, the performance of the CDPQ (6.1%) remains lower than that of Teachers (7.9%) and Omers (7.5%).

What can explain these discrepancies?

The CDPQ beat almost all of its benchmark indexes in the first quarter. Its president and CEO, Charles Emond, nevertheless found himself explaining why the institution had performed less well than Teachers. Cautious in his analysis, he replied in particular that the mandate could vary from one organization to another. Part of the answer can be found here, even if the choices of managers of Quebecers’ woolen socks weigh in the balance. Each institution must meet the requirements of its depositors. The more they are, the more there is likely to be constraints. In the case of Teachers, for example, there is only one clientele: retired teachers.

The CDPQ manages the funds of 46 depositors with very different profiles. For example, alongside Retraite Québec and the Government and Public Employees Retirement Plan (RREGOP), there is the Fonds d’assurance automobile du Québec. The latter will, for example, be more oriented towards the category of fixed income – a category which has suffered greatly since the beginning of the year with the rise in interest rates – since it is an insurer. This affects the Caisse’s overall performance.

Without commenting directly on the returns of other pension plan managers, the Caisse repeated a similar discourse by email.

“We have about forty applicants [qui] all have a portfolio composition that varies according to their needs, and therefore different returns for each period covered,” says Kate Monfette, spokesperson for the CDPQ.

One more term

Unlike institutions like Teachers and Omers, the Caisse’s role is not just to generate the best possible returns. It must also contribute to the development of Québec.

While it’s hard to say how much this dual mission reflects on its overall performance, it has to be taken into account, underlines Mr. Pouliot.

“Sometimes they have to take risks that don’t have the objective of maximizing income,” explains the expert. The CDPQ has never revealed its criteria for promoting the Quebec economy, they are very nebulous, but hey, it exists. It is part of his mission. »